Modeling Accuracy of Promised Ship Date and IT Costs in a Supply Chain

In the current dynamic, competitive business environment, customers expect to see products they purchase to be shipped on the date it is promised. However, accurate calculation of promised ship date by suppliers can only be obtained at expense of corporate IT systems that provide accurate availability data. Our study indicates that refresh frequency of availability data in IT system substantially impacts accuracy of the ship date that is promised to customer. The value of customer service level corresponding to accuracy of promised ship date needs to be estimated against the costs of having necessary IT system. The estimation requires a simulation model of availability management process. In this paper, we describe how to model and simulate the availability management process, and quantify the customer service level resulting from various availability refresh rate.

By: Young M. Lee

Published in: RC24699 in 2008


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